“How can Australia’s e-retailers best prepare for Amazon?” That’s the question Dynamic Business put to nearly 20 entrepreneurs and industry experts, this week, for our exclusive “Let’s Talk…” article, centering on Ecommerce.
To paraphrase a few of our commentators, the global giant is heading to our shores like a freight train outta hell, so e-retailers must get on the front foot now or have their lunch eaten. In terms of what e-tailers should do to thrive in the Amazon era, the consensus seemed to be that they should ASSIMILATE and/or DIFFERENTIATE, while keeping their customer’s needs front and centre.
Read on for hot tips and actionable insights from this week’s lineup…
“How can Australia’s e-retailers best prepare for Amazon?”
James Chin Moody, Founder & CEO, Sendle: “Amazon presents both opportunity and threat to Aussie retailers. If you’re selling non-differentiated, fast-selling items (think iPhones etc) you are likely to lose out while retailers with differentiated products or service offerings are likely to benefit from Amazon’s arrival. It’s important for Aussie retailers to re-examine their business and ask themselves: ‘what value is my business adding here?’. If all you’re adding is margin, Amazon will eat your lunch. On the other hand, if the answer to this question sounds something like, ‘We have a brand, our product is unique and is hard to make/procure’, then Amazon is likely to help you amplify your message and reach a much larger audience over time. It’s a time for reflection and Australian retailers will have to be honest with themselves – Amazon will likely spell boom for the best operators or bust for those just clipping the ticket on ‘me-too’ products.”
Thorsten Wichtendahl, CEO, Australian Geographic|The Co-op: “Seamless customer experience, and frictionless commerce will be critical. We’ve transformed our 130+ stores into Click & Collect points for online orders to give customers choice in how they engage with us – about a quarter of all our online customers choose Click & Collect. Lowering operating expenses should also be a key focus – with price competition on the increase, we’ve looked at ways to structure and organise our business to remain price competitive. Finally, amplifying the equity in your brand can’t be underestimated – having the right structure and leveraging the trust in a brand will be important in the age of Amazon.”
Phil Reilly, SEO Lead, Atomic 212: “Amazon is heading to our shores like a freight train outta hell. While some retailers will be less than pleased, there’s only one way to deal with Jeff Bezos’ online behemoth: Embrace it! It’s estimated that Amazon will take a $12b bite out of Australia’s retail market, which is no small fries. They even have their sights set on the supermarket category, which will likely have Woolworths, Coles and Aldi looking over their shoulder.
“If you’re a retailer, Amazon could easily take a percentage of your business, by snaring a portion of your search results and diverting sales. But, as the old adage goes, if you can’t beat them, join them. Retailers should setup shop on – and optimise for – Amazon. Like Facebook and countless other digital shopfronts, this can be yet another online channel through which retailers can make sales. For smaller retailers who only have one or two physical locations, the benefits are obviously enormous, because you have a nationwide shopfront and a potential customer base in the millions.”
Kristy Chong, CEO, Modibodi & Heads Over Heels Portfolio CEO: “Get onboard. We will be looking to sell our products on Amazon Australia, as we expect that Amazon will eventually take over Google in terms of search and if it is similar to the USA the cost per acquisition will be cheaper than Google.”
Mark Armstrong, VP and MD International Operations (APJ & EMEA), Progress: “Amazon owes its tremendous success to the power of AI and machine learning, which has driven operational efficiency and the personalised shopping experience to unmatchable heights. Thus, to remain competitive in the Amazon era, Aussie e-tailers must harness the power of data. They don’t necessarily need an army of data scientists to compete and survive in the retail revolution. What they need is a solid AI strategy based on integrating all systems, improving data connectivity, and enhancing automation. With these capabilities, retailers can automate the discovery of meaningful data and process orders through their supply chain with speed and precision. They can also automate the personalisation of customer journeys, using data from multiple sources to adapt to each customer’s shopping habits, offering unique experiences based on past behaviour, and predict what shoppers will want tomorrow.”
Tim Bentley, Alliance & Partnership Manager, OFX: “Although Amazon’s launch is likely to be a success, how successful – and the impact on existing retailers – will become evident overtime. I’d expect the major players to resist a move to Amazon, but if we see a break in the ranks, the others will surely follow. Commentators assume it will come down to price, but Aussie consumers are smart and will embrace the choice as much as the price. The key to Amazon’s success locally will be the combination of choice and price competitiveness – and this is where the established retailers will struggle. I think, in the end, most retailers will run dual listings (their own site and Amazon) to determine which will be the more successful and allow them to have a foot in both camps… at least in the early days.”
Rob Hango-Zada, Co-founder & joint-CEO, Shippit: “Logistics players and retailers will now have no choice but to focus on customer engagement and experience or perish. Amazon will be operating with a cost base never before seen by other retailers, so it’s important that Aussie retailers (particularly those with brick and mortar stores) start making changes now to compete effectively upon Amazon’s arrival.
“When it comes to cost-effective delivery solutions, Australian SMBs are underserved, which puts them at a competitive disadvantage. Higher delivery costs, sourcing and storage costs also mean the cost base of a small, local player is going to be astronomical compared to Amazon and this is where there is significant opportunity to improve. By helping thousands of retailers lower costs of – and save time with – delivery, we’re enabling them to compete more effectively with larger players.”
Hugh Stephens, Co-founder, Galileo VC & Founder, Schedugram: “It depends a little on the industry companies hail from. For example, Amazon is more likely to impact e-retailers in the technology space (as happened in the US) compared with those selling wine, furniture or other products that are less commoditised and often require a non-standard purchase experience. Local e-retailers can prepare in one of two ways:
- Focus like crazy on acquiring customers who’ll continue purchasing their products through a differentiated offering – for example, niche customisation you wouldn’t see on Amazon (like how Shoes of Prey has a whole custom shoe platform) but it doesn’t need to mean SKUs with a quantity of one.
- Celebrate Amazon impending arrival – it’ll provide a lot of e-retailers with a new channel to market and enable them to reduce existing ‘back office’ costs by using the behemoth’s fulfilment services.”
Bane Hunter, Executive Chairman, GetSwift: “To survive in the age of Amazon, Australian businesses must understand that customer service and customer expectations go hand in hand. The key question businesses must ask is ‘Do I know in real time what your customers want?’ Because Amazon certainly does. Time is not going to be the friend of Australian businesses, customer data is. But remember, not all data is the same. Live by data, die by bad data. Delivery options and customer service will be key when it comes to competing with the online giant. Make sure you are executing orders rapidly, nimbly and effectively. Make sure you are responding to clients rapidly as well. Customer service helps set a business apart, so static and rigid responses aren’t going to cut it. Remember, never stop looking down the road. Looking where you are walking is good, but looking towards the destination is better.”
Karen Lawson, CEO, Slingshot: “Amazon’s arrival might be the push local retailers need to take a critical look at their current offering and operations to take their business to the next level. The reality is that customer expectations have been completely reset to ‘personalised’ and ‘on-demand’ – if local businesses want to stay relevant, they need to do more to harness new and emerging technologies, independent of whether international competitors enter the market.”
“We need to be agile and we need to be customer-centric. The path the purchase is no longer linear and we must find ways to improve the customer experience, bridging the divide between disjointed business models. To support Aussie retail businesses as international competitors like Amazon enter the market, we’ve partnered with NORA on our RetailTech accelerator to seek out the next generation of disruptive businesses and facilitate their collaboration with some of Australia’s leading retailers.”
Mick Spencer, Founder & CEO, ONTHEGO: “Amazon’s arrival is both a huge opportunity and a massive threat for Aussie e-retailers. Customer service has been lacking in Australia, both online and in-store, with businesses taking customers for granted. As it’s now a global market, we must do things differently and have the attitude ‘There’s no future in the past’. Every day, learn about the customer, where their problems are, and what you can do to solve them. Amazon is a customer-centric company with an impressive commitment to experience, product mix, systems and supply chain. To compete, Aussie e-retailers must look at what Amazon is doing great, and find parts of their own business that can be improved to deliver better outcomes for the customer. There is also the opportunity for e-retailers to re-look at their product mix and determine whether they can build a white label range to sell both on their store and Amazon’s.”
Jackie Crossman, Principal, Red Agency: “Aussie e-tailers must get on the front foot before Amazon hits the local market and clearly define their unique brand proposition and customer benefits. They should undertake an integrated communications campaign to drive this home, enabling Australian consumers to easily identify their business’s USPs as distinct from Amazon’s.
“Turning first-time and irregular customers into loyal brand advocates should be a key component of the communications campaign. To do this, e-tailers must look at their offering and ensure the customer experience is an exceptional end-to-end solution. This includes initial browsing to receiving a purchase, personalisation of products, seamless payment methods, as well as any returns if required. Ultimately, to secure their futures, e-tailers must keep the Australian customer front of mind for everything they do.”
Ivan Lim, Co-founder & CEO, Brosa: “Australian e-retailers must have a unique offering, whether that’s through their brand, range, merchandising, experience, expertise or curation. The key is to take a long hard look at your business, find your USP and build this out. By identifying what you do well to delight customers and what Amazon does well, you can identify what is most advantageous to focus on rather than trying to go head to head with a giant. Double down on those areas to better satisfy your customer and focus on building customer loyalty to your brand.”
Dave Scheine, APAC country manager, Vend: “Amazon’s sweet spot is currently mass-market and ‘chore’ products. Those who sell unique, independently produced or sourced items, like many of Australia’s small retailers, will continue to see demand. Shoppers will always want products they can fall in love with. What’s important is that multi-channel retailers are able to get in front of potential customers and give them the best experience possible, such as fast delivery, easy access to items, quality products, and a personal touch. Retailers need to make sure they know their customers. Then they need credible and valuable ways to talk to these customers, so they can encourage repeat sales and attract new shoppers.
“With Amazon coming to Australia, independent retailers will have another sales channel available to do just that. They can use Amazon’s marketplace to their advantage by reaching a wider customer base, having their goods delivered faster, easier and cheaper than ever before, and using Amazon as a way to quickly shift excess stock. In other countries, Amazon even offers to fulfil orders for e-tailers and this may make its way to Australia too. There’s opportunity for our multi-channel retailers to benefit from Amazon’s arrival by using it as an additional way to sell, while still providing a unique and exceptional service in their own stores.”
Greg Taylor, Group VP (JAPAC), New Relic: “Amazon’s arrival in Australia is poised to set the bar for – and change the rules of – e-tail. But it certainly does not have to be the end for smaller local e-tailers. They can beat or at least co-exist with Amazon by offering outstanding experience throughout the entire customer lifecycle (since Amazon will assume the power of low price as its main advantage). To prepare for Amazon, now is an opportune time for Australian e-tailers to review their online business strategy and technology platforms to deliver easier online and ordering experience, easy and fast return and delivery experience and offer a wider variety of products.
Martin Cox, Director & Co-founder, DO Commerce: “I work closely with hundreds of e-retailers and Amazon’s arrival has been a conversation on the radar for some time. Interestingly many are confident it will bring with it a tide of positive consumer choice and opportunity. Much like the mysterious Y2K bug, the fear of the unknown certainly has the pundits speculating and in some case fear mongering, but for small to medium sized businesses open to change and with an understanding of their customer base, it’s going to be less of a threat.”
“In the past, brand loyalty revolved around price, product selection or store location. With the expansion of the global online marketplace, loyalty is now driven by positive digital experiences. The truth of the matter is, our local Australian retailers clearly have an advantage, they already know their customers quite intimately, they know their product preferences, their shoe size, and they can serve really personalised experiences. It’s these personalised experiences that their customers are loyal to.
“As a smart business, prepare for Amazon by…
- Examining your business values – Ensure your brand (and its values) is clearly identifiable (and articulated) across all your digital elements from website, social and email communication.”
- Analysing your customer – People feel loyal to brands that ‘get’ them and this understanding needs to start with how they like to receive information. Ensure you have all the data necessary to understand your customer preferences including where and how they want to consume content.
- Get personal – Amazon nails user convenience, among other things, with its simple upsell. In this fast-paced digital landscape, convenience is (understandably) one of the main pillars of loyalty. Time is one of our most valuable resources and consumers appreciate winning back moments, down to the minute. If you’re not already and you have existing customer data, now is the time to personalise shopping experiences. And while we’re getting personal, it’s clear that customers love the opportunity to personalise products to create bespoke items. Consider if personalisation works for your brand’s product or service – adding this to your purchases will strengthen your loyal customer base.
“For those who are agile, and can personalise their ecommerce experiences, I anticipate Australian businesses will hold onto their loyal customers and benefit from the increasing size of the pie.”
Jeff McAlister, CEO, Trybooking: “Amazon’s arrival is a great catalyst to review your business’ best practice and work on your own internal strategies. If you can’t compete on price, what else can you compete on? Build your connections to the local community, celebrate that you are Australian owned and operated. Give your customers a reason to want to support other local companies and give them a level of service that is so good people don’t expect it. Give your customers an option to talk to a real person, rather than wait 48 hours for an emailed response. Your company can do customer service better than Amazon. For some consumers, these things will be all the difference.”
David Bray, Sales Director Retail, Oracle NetSuite: “Amazon’s global retail knowledge and deep pockets enable it to operate with huge volumes and thin margins, which presents a challenge for Aussie e-tailers. Adding fuel to the fire is the novelty and intrigue of Amazon itself to the Australian consumer, combined with an increased appetite for new approaches that focus on the customer. Here’s how e-tailers can stay competitive:
- Watch and learn – The best way for e-tailers to prepare is to learn from other markets around the world which Amazon has successfully captured, particularly the US, where the brand has an established presence and sophisticated business model.
- Create a point of differentiation – E-tailers should focus on differentiating their services, particularly because competing on price isn’t a healthy long-term strategy. Ask yourself if what you’re offering is a commoditised service or product: do you have a differentiating value to retain the loyalty of your customers? Do you bring something to the market that Amazon can’t do? Therein lies your opportunity for success.
- Put the customer at the centre – Brand loyalty and customer centricity is a critical factor for winning over competition, along with the right combination of pricing and an exceptional quality of service. A next level of customer engagement and fulfilment can help local e-tailers acquire an edge over Amazon. Building a 360-degree view of customers and having complete real-time insight can be a powerful tool for smaller e-tailers who can be more agile in their approach.
- Establish end to end visibility – Establishing a single view into inventory to anticipate and satisfy customer demand will be critical. If your website doesn’t reflect instant information on stock availability, you will quite simply disappoint your customer and they will go elsewhere. With the right systems in place, e-tailers can build stronger relationships with their customers which will ultimately drive brand loyalty.
“As Amazon continues its path towards an Australian launch, e-tailers must learn to adapt quickly by using technology and strategy that provides them with these advanced capabilities to build loyalty and deepen engagement with their customers. In the end, the e-tailers that make purchasing the easiest, the shopping experience the best and customer service of the highest quality will win.”
About “Let’s Talk…”
This exciting new, weekly initiative provides entrepreneurs and industry experts with a forum to share rapid-fire views on a range of issues that matter to start-ups and SMEs. Every Wednesday, we pose a themed question to a line-up of knowledgable industry figures, with a view to picking their brains for valuable insights to share with you, our readers.
See also: Let’s Talk Raising capital – Parts ONE and TWO.